Tags: sce

10/28/16

  12:14:00 pm, by Jim Jenal - Founder & CEO   , 1654 words  
Categories: All About Solar Power, PWP, SCE, Residential Solar, Ranting

Understanding Tiered vs TOU Rates

A client of ours noted that Pasadena Water and Power (PWP) offers, in addition to its regular, Residential tiered rate structure, the option to switch to a Time-of-Use rate structure, and he asked if he would derive additional savings from making that switch. Turns out that is not an easy question to answer, and there certainly isn’t a “one size fits all” result. We decided to take a closer look into these rates both for PWP and for the folks in Southern California Edison (SCE) territory.

SPOILER ALERT - The following is pretty much down in the weeds.  You have been warned!

Defining Tiered and Time-of-Use (TOU) Rates

Let’s start by defining our terms. Most residential electric customers, of both PWP and SCE, are on a tiered rate structure. That means that there are two or more cost steps - called tiers - for the energy that you use. Tiered rates assume that there is some minimally expensive charge for the first allocation of energy per billing cycle, and that as you use more energy your cost for energy increases. For example, SCE’s Domestic rate has three tiers and in the first tier the charge is 8.8¢/kWh, in the second tier the charge is 16¢/kWh, but the final tier is 22.4¢/kWh! (There  is also a non-tiered component that adds another 6.9¢/kWh to the customer’s bill.)

PWP, on the other hand, has a somewhat perverse tier structure in that the lowest tier is very cheap, 1.7¢/kWh, the second tier is significantly higher, 13.5¢/kWh, but the final tier actually goes down to just 9.9¢/kWh! Since the whole point of tiered rates is to provide an incentive for heavy users to reduce their usage, PWP is actually rewarding those who consume more than 25 kWh per day with lower rates! Very odd.

Time-of-use rates, on the other hand, are generally not tiered. Instead, the day is broken up into segments and the cost of energy varies depending on the segment in which it is consumed. PWP refers to these segments as “On-Peak” (from 3-8 p.m.) and “Off-Peak” (all other hours). But PWP’s TOU rate retains the tiered element as well, making it a truly odd hybrid rate structure.

SCE’s approach is more involved, dividing the day into three, more complicated segments: “On-Peak” (2-8 p.m. weekdays - holidays excluded), “Super Off-Peak” (10 p.m. to 8 a.m. everyday), and “Off-Peak” (all other hours).

For both PWP and SCE there is a seasonal overlay on these rates, with energy costs increasing in the summer months (defined as June 1 through September 30).

(It is important to note that both PWP’s and SCE’s TOU rates put the most expensive energy in the late afternoon to evening time period - pricing energy to offset against the “head of the duck.” Ultimately, these rates will create the energy storage market in California, but that is a post for another day.

Analyzing the Benefits of a Rate Switch - Pre-Solar

Assuming that one can create a spreadsheet to model these different rates (not a small task in and of itself!) there is one more hangup - data. Both PWP and SCE report total monthly usage to customers on their tiered rate plans - but in order to analyze your potential bill under a TOU rate, you must have hourly usage data for every day of the year! (Because there are 8,760 hours in a [non-leap] year, such a usage data collection is typically referred to as an 8760 file.)

The standard meters that PWP has installed simply do not record that data, so the average PWP customer has no way to know whether they would save money by making the switch.

On the other hand, most SCE customers do have access to that data and they can download it from SCE’s website.

After you create an account, login to it and go the “My Account” page. On the left-hand-side you will see some options - click on “My Green Button Data” (the too cute by half name for the interval data you are seeking), select the data range for the past twelve months, set the download format to “csv” and check the account from which to download. Then press the “download” button and cross your fingers - in our experience, the SCE website fails about as often as it actually produces the data that you are seeking!

Modeling PWP

Given that PWP doesn’t have data available, is there any way to estimate what the results might be? The answer is, sort of. We took an 8760 data set from an SCE customer and used that as our test data for both PWP and SCE. (The data file does not identify the customer.) Since the data file has an entry for every hour of every day, we can segment the usage against the On-Peak and Off-Peak hours, and using a pivot table - probably the most powerful took in Excel - we can summarize those values over the course of the year, as you see in Figure 1.

PWP segmented usage

Figure 1 - Usage Profile for PWP

Summer months are highlighted in orange. For this specific energy usage profile, Off-Peak usage is more than twice that of the On-Peak usage (9,806 to 4,009 kWh respectively). So how does that work out when we apply the two different rate structures? The table in Figure 2 shows the details of the two rates:

PWP standard and TOU rates

Figure 2 - PWP Rates - Standard Residential and TOU

Under both rate plans, the distribution is tiered (with the perverse reverse incentive for usage above 750 kWh). Added to that is either the seasonally adjusted flat rate for energy, or the seasonally adjusted TOU energy charge.

Applying those rates to the Usage Profile in Figure 1 allows us to see what the energy and distribution components would be under both approaches. Given the hybrid nature of these rates, you might expect them to be similar and you would be correct. The distribution charge - which applies to both - comes to $1,180 for the year. The flat rate energy charge comes to $893, whereas the TOU charge is $985. Meaning that someone electing to use the TOU rate would have a yearly total of $2,165, whereas the flat rate user would have a total bill of $2,074, making the TOU rate - for this specific energy profile - 4% higher.

Beyond that, PWP has a number of other charges - such as a public benefit charge, an underground surtax, and a transmission charge - that are only tied to total usage, so the ultimate difference between these two rates is even smaller.

Modeling SCE

SCE rate structures are significantly more complicated that PWP’s. For example, the tier 1 (aka baseline) allocation varies by location. Since SCE covers such a huge and diverse area from cool coastal regions to absolute deserts, customers are allocated more energy per day in their baseline depending upon where they live. In the area around Pasadena that is covered by SCE, a typical daily baseline allowance would be 13.3 kWh in the summer and 10.8 kWh in the non-summer months. The baseline then is that number times the number of days in the billing cycle. Tier 2 applies to every kWh above baseline, but below 200% of baseline. Tier 3 applies to everything beyond that. As with PWP, the tiered rate only applies to “delivery” charges. The energy generation charges are the same all year. Here’s what that rate structure looks like:

SCE Domestic Tiered rate

Figure 3 - SCE’s Tiered Domestic Rate

The first thing that you notice when you look at this rate is how much higher it is than the rates from PWP, and the end calculation bears that out - the same usage that resulted in an annual bill of $2,074 in Pasadena becomes $3,227 once you cross the border into Altadena, South Pasadena, San Marino, or Sierra Madre - an increase of 56%! (There’s a reason why a growing percentage of our clients are coming from those surrounding, SCE-territory communities!)

So what would happen if this beleaguered client were to shift to a TOU rate? First, we need to re-parse the usage data according to SCE’s more complicated segmentation scheme, which gives us Figure 4:

SCE segmented usage data

Figure 4 - SCE’s Segmented Usage Data

Once again, the On-Peak usage is the smallest category of the three, amounting to just 23% of total usage, compared to 42% in Off-Peak, and 35% in Super Off-Peak.

Of course, SCE can’t do anything in a simple fashion, so they have not one but two basic approaches to their TOU rates, Option A and Option B.  Option A rates run from a low of 13¢/kWh (in summer Super Off-Peak), to 29¢/kWh (during summer Off-Peak) to an eye-popping 44¢/kWh (during summer On-Peak).  However, Option A includes a credit of 9.9¢/kWh on the first baseline worth of energy which reduces the monthly bill by roughly $30.

Option B deletes that baseline credit and replaces it with a “meter charge” (even though it is the same meter!) of 53.8¢/kWh/day, or roughly $17/month.  In return, the On-Peak charges are significantly reduced from 44¢/kWh to just 32¢/kWh.

So how does this shake out?  The results are quite surprising, as shown in Figure 5.

SCE rate comparison - Tiered vs TOU

Figure 5 - SCE Rate Structure Comparison

The two left columns show the month-by-month calculations for both delivery (the tiered component) and generation (the flat component).  The two right columns show the month-by-month calculations for the two different TOU rates.

The bottom line is striking: under TOU-A there is a savings of 5% over the tiered rate, whereas the savings jump to 19% by going to TOU-B!  That is a savings of $600/year just by changing rate plans - a switch that any SCE customer can make.

MAYOR CAVEAT: YOUR MILEAGE WILL VARY!

The results displayed here are entirely dependent on your actual energy usage and no two usage profiles are alike.   It is possible, even likely, that some usage profiles will see an increase in bills under either TOU option.

The good news is, that for a nominal fee,  this is an analysis that we could do for any SCE residential customer - we would just need access to your usage data.

So that completes our pre-solar analysis. In our next post, we will look at how these results change when you add a solar power system into the mix.

02/01/16

  03:12:00 pm, by Jim Jenal - Founder & CEO   , 1953 words  
Categories: Utilities, SCE, Ranting, Net Metering

Net Metering 2.0 Explained

On January 28 the California Public Utilities Commission (CPUC) voted 3-2 to adopt new rules governing what is known as Net Energy Metering, thereby creating the framework for Net Energy Metering 2.0 (NEM 2.0).  Here is our take on what the CPUC did, and didn’t do.

What Hasn’t Changed

The first and most important thing to know is that for many people, the new rules adopted by the CPUC will not affect you at all!  These new rules only directly apply to customers of the three investor owned utilities (IOUs): SCE, PG&E, and SDG&E.  If your electrical service is provided by one of the municipal utilities - like PWP or LADWP - nothing that the CPUC did last month will directly affect you since the CPUC does not have jurisdiction over the munis.  (That said, the munis often follow the lead of the CPUC, so it is entirely possible that they will individually adopt their own version of NEM 2.0, but that will be a discussion for another day.)

Even for solar clients in the service territory of one of the IOUs, if you have already signed a net metering agreement, you will be grandfathered in and allowed to continue to operate under the old rules for 20 years.  Once the 20 years have elapsed, you will be transitioned to the net metering rules (NEM 5.0?) then in effect.

Beyond all of that, even for new solar clients in IOU territory, these new rules do not go into effect right away.  Rather, the old rules will still apply until your utility reaches their 5% of customer aggregate demand cap, or July 1, 2017 - whichever comes first.  In SCE territory it is an open bet as to which will occur first (see more below).

Bottom line: this is not happening right away, so you still have time to benefit from the existing rules.

What is Going to Change

Net metering is changing

Net metering is changing!

Proposals

Lots of people weighed in on NEM 2.0 including all three IOUs, CALSEIA, NRDC, and various advocates for rate reform and consumer protection.  While some of the proposals, and their proponents, were entirely predictable, others were not, and at least one such position was seriously disappointing.

For example, the three IOUs all advanced proposals that would have significantly reduced the value of going solar.  SCE wanted to reduce the rate for energy exported from full retail to just 7¢/kWh (with a 1¢ adder if you give SCE your renewable energy credits), plus a $3/kW/month “grid access charge", and a one-time $75 interconnection charge.  (SDG&E’s proposal was even worse, seeking a $9/kW/month charge!) On top of that SCE wanted to eliminate virtual net metering altogether.

At the other extreme, the “solar parties” (such as CALSEIA and The Solar Alliance) advocated for keeping net metering at full retail value.  However, in a nod to changing realities, they did support paying on nonbypassable charges (more on that mouthful in a minute) but not until after 2019.

Still, there was one proposal that strikes us as entirely reasonable which CALSEIA opposed - mandatory warranty periods.  Back when the California Solar Initiative was in place (i.e., when SCE was paying rebates), solar contractors were required to provide a ten-year warranty on their work in order to participate in the program.  With the demise of the CSI program, technically that warranty requirement also went away.  As part of the NEM 2.0 rulemaking, ratepayer advocates advanced the notion of restoring the warranty requirement - a common sense request that no one should oppose.

But the “solar parties” did oppose it, asserting that such a requirement could “discourage innovation in product offerings."  Seriously?  What “product” might we reasonably want to offer that having to stand behind it would be discouraging? When pressed about this position during CALSEIA’s NEM 2.0 webinar, Brad Heavner, CALSEIA’s policy director, said that the view was that the market could decide this: presumably if a company didn’t offer a warranty and that was important to the customer, they would go with a different company.  This was not, however, a position that CALSEIA pushed hard to win, and in the end, they lost on this point.

In our view, opposing a mandatory warranty paints solar in a bad light.  It puts the industry on the side of those who do the least reliable work, and penalizes those companies who go the extra mile to install systems that will stand the test of time.  From what we have seen it is tough enough to get a company to honor its warranty commitments, let alone relying on the “invisible hand” of the market to protect consumers.  CALSEIA did a lot of great work on NEM 2.0, but this position was a mistake.

Decision

The ultimate decision is a major defeat for the IOUs, and a partial victory for the solar industry.  For the IOUs, they clearly overplayed their hand, advancing proposals that were so clearly anti-solar that the Commissioners couldn’t really take them seriously.  According to a CALSEIA webinar, toward the end of the proceedings the IOUs suggested an energy export feed-in-tariff which, if they had proposed it at the start, might have gained traction.  Something to think about as we look toward subsequent iterations on NEM rules.

The solar industry retained full retail value for energy exports, but they also saw three changes that undercut somewhat the value of that victory: nonbypassable charges (NBC) for all energy taken from the grid, one-time interconnection fees, and mandatory time-of-use (TOU) rates.  Let’s look at each in turn.

Nonbypassable Charges (NBCs)

As part of their rate schedules, the IOUs have certain rate components that are known as nonbypassable charges or NBCs.  For example, if you were to look at SCE’s Domestic Rate schedule tariff page (check out page 3), you would see a whole host of factors that go into making up the rate that the customer ultimately pays.  The decision affects three of those NBCs: the Nuclear Decommissioning Charge, the Public Purpose Programs Charge, and the Department of Water Resources Bond Charge.  The sum of those three charges for an SCE residential rate payer  comes to 2.224¢/kWh.  (The lion’s share of which is the charge for public purpose programs, such as bill assistance to people on limited incomes.)

Under the old rules, solar customers would only pay for these charges on the net energy that they consumed in a month.  So, if your consumption was 1000 kWh per month, and your solar system produced 800 kWh, you would only pay these charges on 200 kWh, about $4.45.  Under the new rules, however, every kWh that you pull from the grid, whether it is ultimately netted out by energy you exported, is subject to NBCs.  Sticking with the same example, of the 800 kWh that you produce, imagine that 500 kWh of that are consumed at your home and the remaining 300 kWh are exported.  Meaning that you imported a total of 500 kWh from the grid.  As a result, under NEM 2.0 you will pay NBC on 500 kWh — raising the charge from $4.45 to $11.12, and increase of $6.67/month on the solar customer’s bill.

The relatively small impact of the NBCs is due in part to solar industry lobbying that held the line at around 2¢/kWh versus a proposal, apparently favored by the two dissenting Commissioners, to include more charges that would have brought the total above 4¢/kWh.  (Indeed, we are told that keeping the NBCs at 2¢/kWh is what caused those two Commissioners to vote against the final package.)

Frankly, we think the NBC costs are fair.  The programs supported by the NBCs are a public benefit and all other customers pay for those based on every kWh they pull from the grid.  Under the new rules, so will solar customers.  Of course, if you are in a lease and only saving $20/month from your old bill, this is a much bigger hit.  Yet another reason to avoid leasing!

One-Time Interconnection Fees

Also reasonable was the imposition of one-time interconnection fees to be set based on the IOUs actual cost of handling the interconnection.  The CPUC estimates that the fee will be somewhere between $75-150.  (Recall that SCE advanced a $75 fee as part of its proposal, so it will be fascinating to see if they try to come back for a higher fee now!)

Mandatory TOU Rates

The biggest hit to solar mandated by the NEM 2.0 rules was the requirement that solar customers get switched over to TOU rates.  (SCE is moving all customers to TOU rates eventually, but that target date is 2019.)  Under TOU rates, you pay more for your energy depending upon the time of day when you use it, as opposed to being on a tiered rate schedule where you pay more when you use more during a billing cycle.  For residential customers, SCE sets its peak charge time as the hours between 2 and 8 p.m., and Noon to 6 p.m. for commercial customers.  This means that, for residential customers, solar exported to the grid before 2 p.m. will be valued less than energy that needs to be pulled from the grid after the sun goes down, but before 8 p.m.

It is this change to the rate structure, and to a lesser extent the imposition of the full NBCs, that makes intelligent energy storage that much more valuable.  With smart storage, you won’t export energy during the day, you will store it for later use.  That reduces the total amount of energy pulled from the grid (lowering the NBCs) and allows you to shift the availability of the energy to the evening so as to avoid peak TOU rates altogether.  There can be no doubt that this is the future for how solar installations under NEM 2.0 (and likely beyond) will be the most cost-effective.  We are optimistic that by the time NEM 2.0 goes into effect for SCE clients in our service area, we will have an intelligent storage solution to offer.

Timing

So when does all of this go into effect?  As we noted above, at the very latest, the new rules go into effect on July 1, 2017. Most likely, however, they will go into effect sooner than that since the actual start date is tied to when the IOU reaches its 5% cap.  In SCE territory, the following NEM report is informative:

SCE's NEM report

SCE’s total customer aggregate demand, the basis for the 5% cap, is 44,807 kW.  5% of that is 2,240 MW of solar installed.  As of the end of December, 2015, SCE had 1,388 MW of solar either installed or with net metering agreements in place, leaving 852 MW remaining under the cap.

The report also shows that applications for 48.1 MW of new solar were received during the month of December.  If we take that number as  a fair monthly average, we can expect SCE to reach its cap in 17 to 18 months. So to lock-in your system under the existing rules, you will need to have your net metering application complete and on file with SCE before then (May-June 2017).  We will continue to update on the status of SCE’s progress toward its cap.

Final Thoughts

On the whole, the solar industry dodged a bullet, especially when you look at the latest battles over NEM in other states, like Nevada.  This success is a tribute to the thousands of people who took the time to advocate for solar, whether they be our trade association, CALSEIA; individual solar companies, like Run on Sun; or solar customers who reached out to inform the Commission of the true value of solar.  Not lost in the debate was the importance of solar as a job creation engine in California.

Moreover, the political climate in California, from the Governor on down, has been strongly supportive of solar and they deserve our thanks as well.

We would love to hear your thoughts and if you have questions that haven’t been answered here, please leave them in the comments and we will do our best to address them.

11/30/15

  08:37:00 am, by Jim Jenal - Founder & CEO   , 390 words  
Categories: Solar Economics, SCE, Residential Solar, Ranting

Your Solar Savings - Stolen?

You may have heard that there are forces afoot - brought to you by the investor-owned utilities - that would lead to a “catastrophic” diminution of savings from solar power systems.  Stories from the LA Times, to CNBC, to even the Motley Fool all are proclaiming that change is coming to solar and the end is in site for any real solar savings.  To which we say - not so fast.  Take a deep breath and read on to see our take.

For example, just today the LA Times ran a story in the Business section quoting solar customers who were “just so angry” over not having access to renewable energy credits (RECs) under the state’s new renewable energy targets law.  Yet, that isn’t a change to past practices – no residential client has been able to sell RECs on the open market.

CPUC logoSimilarly with the upcoming changes in the state’s net metering rules - while the investor owned utilities, including our own Southern California Edison, are lobbying like mad to make solar less economically appealing, no decision has yet been reached.  Moreover, the California Public Utilities Commission (which is charged with resolving this issue) has consistently sided with the solar industry, and most likely will do so now.  If they don’t, there will still be the option of seeking a legislative fix before the new rules can go into effect.

And that raises yet another point that counsels for a less breathless approach to all of this: the new rules won’t take effect for at least a year, and clients who install solar before then are locked into the present, solar-friendly net metering rules for the next twenty years!

So let’s recap:

  • Today’s “solar-friendly” net metering rules will still be available to solar clients for at least the next year;
  • A consumer who installs solar before the new rules go into effect will be grandfathered into the current rules for 20 years; and
  • The 30% federal tax credit remains in effect going into 2016.

But there is one catch here - the second half of 2016 is poised to be crazy with lots of consumers trying to get their projects completed in time to take the tax credit.  This will invariably lead to a real crunch and folks who wait too long will miss out.  If solar is in your plans for 2016, the time to get started is now!

08/14/15

  11:26:00 am, by Jim Jenal - Founder & CEO   , 253 words  
Categories: All About Solar Power, Solar Economics, Residential Solar, Ranting

Only YOU Can Save Rooftop Solar!

Solar works!Smokey the Bear knew a thing or two about urgency, and appropriating his call to action seems particularly apt right now.  Today, rooftop solar is under concerted attack before the California Public Utilities Commission (CPUC).  If we are to maintain the growth of solar, with its tens of thousands of jobs here in California, as well as its huge benefits in reducing air pollution - particularly greenhouse gas emissions - we need YOU to act now.

Our friends over at Vote Solar, along with the California Solar Energy Industries Association (CalSEIA) are working to beat back the insidious proposals coming from the Investor Owned Utilities - including SCE - to gut net metering and impose taxes on those who invest in rooftop solar.  If those proposals were to be adopted, much of the economic value of solar could be destroyed.

But it doesn’t have to be that way.  The CPUC is a poltical entity and like any political entity, it responds to pressure from the public.  We cannot match the economic clout of the IOUs, but we can beat them the old fashioned way - by standing up for solar!

It’s easy - just click on this button:

SIGN PETITION!

When you do, you will go the Vote Solar website where you can add your name to the list of concerned Californians who want to preserve the many benefits of rooftop solar.  Please pass this word on to your friends and colleagues and urge them to get involved too!

We can win this fight - but we need YOU now!

05/10/15

  04:49:00 pm, by Jim Jenal - Founder & CEO   , 1451 words  
Categories: All About Solar Power, Solar Economics, Residential Solar, Ranting, Energy Storage

Elon Musk's 3-Biggest Powerwall Whoppers

Elon Musk is a visionary and a showman, but occasionally his enthusiasm for his vision gets way out ahead of reality.  Nowhere was that disconnect more on display than this past week when he made his much talked about announcement of the Tesla Powerwall battery storage system.  While we share the vision for the potential of battery systems (such as the one Enphase Energy is set to release later this year, albeit in a far more understated fashion), when 38,000 people go online to order a product that doesn’t yet exist, it is time to debunk some of the more exorbitant claims made by Musk. 

Here are the three biggest whoppers that Musk made during his Powerwall presentation (video below).

Whopper #3 - Power for an ice storm or other significant grid failure event

Musk touted the “peace of mind” that would come from having the Powerwall, and said, “if there’s a cut in the utilities you’re always gonna have power, particularly if you’re in a place that’s very cold, now you don’t have to worry about being out of power if there’s an ice storm.” (See video at 8:35.)

The Powerwall unit that Musk was talking about that was designed for “daily cycling” was a 7 kWh unit that is priced at $3,000.  The average home in the Run on Sun service area uses 25 kWh/day.  So a single Powerwall unit provides roughly one quarter of the energy demand of an average home.  If your desire for “peace of mind” means running your home for a full day in normal fashion, you will need to purchase 4 Powerwall units (assuming you have the wall space to mount them) and that will cost you $12,000.

Of course, many outages last longer than a day.  The longer you want to stay powered, the more units you will need.

Whopper #2 - Powerwall will work with existing solar systems

Musk insisted that Powerwall has been designed to work with solar systems, “right out of the box."  (See video at 8:25.)

Except… that the Powerwall is designed to fit between existing solar panels and the DC-AC inverter(s) in the system (i.e., on the DC side of the system).  But here’s the thing - the vast majority of inverters are what are known as “grid-tied,” which means if the grid goes down, the inverter shuts off, and stays off until the grid comes back.  If the Powerwall is on the DC side, there is no way for it to “mimic” the grid (which, of course, is on the AC side), and so the inverter will shut off.  While the inverter could certainly be replaced with a hybrid inverter (that can work both independently and tied to the grid) such a replacement is a pricey undertaking and certainly not a plug-and-play installation.

But Musk, like the true showman that he is, saved his biggest Whopper for the end…

Whopper #1 - You can go off grid… for $3,500!

Warming to his subject, Musk really brought down the house with his most outrageous claim of all:

You could actually go, if you want, completely off-grid.  You can take your solar panels, charge the battery packs and that’s all you use.  So it gives you safety, security, and it gives you a complete and affordable solution.  And the cost of this is $3,500."  [Gasps and applause from audience.] (Video at 8:55.)

No.  No you cannot.

Let’s unpack his statement.  There’s two major claims here, neither of which is true.  The first is that you could go completely off-grid, and the second is that it would cost you $3,500.  So let’s start with the easy one to disprove, indeed, we already did above: this won’t cost $3,500.  The Powerwall provides 7 kWh of storage.  The average house uses 25 kWh/day.  If the battery has to run your house for just one day, you would need 4 Powerwall units at a cost of $12,000.  (The 7 kWh unit is the one designed for daily cycling - what you need to go off-grid, and it costs $3,000 - if you could actually purchase one, which you can’t.)

So that’s easy to debunk.  But what about the second, more fundamental question.  Can I use this Powerwall system to go off-grid without changing my middle-class, suburban lifestyle?  For most folks the answer is simply, no.  Here’s why.  When you go off-grid you need to be able to meet all of your energy needs all the time without assistance from your local utility.  To do that, you need a battery system large enough to last you during the longest typical shortfall of available energy (i.e., how many stormy/cloudy days in a row will you see), plus a solar array large enough to charge that battery on sunny days while meeting the household needs.  Turns out, that is quite a lot of both.

Folks who design off-grid systems (very few of which are found in areas like Pasadena), typically design for three (or more) days of self-sufficiency (or autonomy, as they put it).  For our typical, 25 kWh/day home, that would require storage of a minimum of 75 kWh.  But according to Tesla, you can only stack a maximum of nine Powerwall units, which limits you to 63 kWh.  Sometime around noon on that third day without sun, your house will shut down.  Oh, and that much storage will cost you $27,000.

What about the solar array side of the equation?  Let’s start by asking how big an array can you fit on an average house?  House sizes have trended bigger in the past couple of decades, so more recently built houses are an overstatement of the average house out there.  Still, to have a starting point (and to give Musk the benefit of the doubt), let’s assume that our average house is 2,400 square feet (a fair estimate based on US Census data), and that it is optimally designed to maximize solar production: a near perfect square with a true south face, pitched at latitude (34° here in Pasadena), with no shading.  Of course, we still have to give the Fire Marshall the desired setoffs so that gets us to 1,115 square feet of roof space (math available upon request), enough for 62 LG 305 solar modules, but because we need to use a hybrid inverter with fixed string sizes, we will drop that down to 60 solar modules. That yields an 18.3 kW system which at $3.50/Watt would cost a cool $64,000 - and be bigger than our biggest ever residential installation. 

So the Sixty-four Thousand Dollar question becomes: How well will that do on meeting our needs?  Per the CSI calculator, this maximal system will produce roughly 29,000 kWh in Year 1, or an average daily output of 79.5 kWh.  (Less in the winter, of course, when you are most likely to see those cloudy days.)  After providing for my daily needs of 25 kWh, I have 54.5 kWh to spare, not quite enough to fully charge my batteries (which require 63 kWh).  A scenario where I have two cloudy days, followed by one partly sunny day, followed by two more cloudy days could easily leave you in the lurch.  And for this you paid a total of $91,000!  If you live somewhere with poorer weather than what we find in the Run on Sun service area (i.e., pretty much the entire rest of the country!) your performance will be even more dismal.

The true value of storage

The sad part of this whole thing is that battery storage combined with solar is going to be huge, but not for the reasons Musk alluded to in his speech.  The future of utility rates is the shift to time-of-use rate structures - a fact already well and painfully known by our clients in SCE territory, and soon to be seen by everyone.  Time-of-use rates, where utility customers pay more for energy during the peak part of the day, are the only way to match utility costs with customer charges.  (It is the head of the Duck in the famous Duck Curve below.)

The famous duck curve

That “overgeneration” that drives down demand at noon is presently fed back to the grid, where the grid operator has to modify the power mix to accommodate it - in essence, it is wasted.  (Although presently, net metering customers get full retail credit for it - something, that in all likelihood, will soon go away.)

But add storage to the mix, and you shift that overgeneration from the middle of the day, to the evening peak hours, benefiting the time-of-use customer as well as the utility.  It is the way to bring about a peaceful end to the utility-solar wars, and it is the true benefit of storage to solar customers - without oversizing either your solar array or your storage system.

So let’s all get excited over solar with storage, but for the right, and much more cost-effective reasons - and not the nonsensical hype being spewed by that super showman, Elon Musk.

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Laurel Hamilton is Run on Sun's Projects Coordinator, and together they author this blog.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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